- The VIX is near 30 which is usually a bullish indicator.
- While growth appears to be normalising back to typical levels, few are predicting a recession, at least not in the near-term.
- The 2-10 yield curve, while flat, is still yet to inverted, indicating a recession is unlikely for at least 12 - 24 months.
- Most market fears such as trade tensions and political risks are man made and could very quickly be resolved if it becomes politically or economically expedient to do so.
- Many large-cap stocks such as AAPL, AMZN, and FB have fallen over 25% at this point. During the finical crisis, which was quite a severe recession, stocks such as AAPL and AMZN fell around 50%. So unless the next recession is truly awful, I'm starting to wondering how much further these names can fall? Especially given the P/E on names like AAPL and FB.
- WSB has begun to short SPY and large-cap stocks.
What would be a good bear case for more selling at this point? Unless earnings start to show significant margin compression or an unexpected slowing in top-line growth I'm not sure why we wouldn't see a decent bounce from these levels early next year. From the data I've seen everything seems to point in the direction of a market over-reaction. Thoughts?
Submitted December 20, 2018 at 02:39PM by kriptonicx https://ift.tt/2AazTPY
